Auditing and Attestation- Certified Public Accountant (CPA) Practice Exam -

Which phrase is most likely to be included in a qualified opinion report due to inadequate disclosure?

1. All material matters are properly disclosed

2. Except for the omission of key information as described

3. The financial statements are misleading overall

4. No material misstatements were found

The correct answer is: Except for the omission of key information as described

The phrase that would most likely be included in a qualified opinion report due to inadequate disclosure is one that recognizes a specific limitation or omission in the financial statements. In this context, stating "Except for the omission of key information as described" clearly indicates that while the financial statements are generally acceptable, there is a significant deficiency in disclosure that affects the completeness and reliability of the information presented. A qualified opinion is issued when the auditor believes that, aside from a particular issue, the financial statements still present a true and fair view. The emphasis on "except for" highlights that there is a noteworthy exception to an otherwise clean report, which is pivotal when discussing inadequate disclosures. This term serves to direct attention to the specific matter that could mislead users of the financial statements or diminish their utility. The other phrases suggest either an overall satisfactory situation or a general misrepresentation, which would not be characteristic of a qualified opinion focused on specific inadequacies in disclosure. Thus, the inclusion of the phrase indicating an omission directly addresses the nature of the qualification and accurately reflects the auditor's findings.